The German Biotech Industry Faces Funding Crunch Despite Market Stability

The German biotech industry held its own in a challenging market environment in 2025, but continues to struggle with structural financing challenges.

That is according to the “German Biotechnology Report 2026” by the auditing and consulting firm EY-Parthenon, which was prepared in cooperation with the industry association BIO Deutschland and presented for the first time at the Biotech Finance Summit in Berlin on June 8th, 2026.

German biotech companies raised a total of €1.8 billion in capital last year

That represents a 5% decrease compared to 2024. The decline was particularly pronounced in venture capital investments, which fell from nearly €900 million to €601 million, a drop of 33%. At the same time, available capital became increasingly concentrated in the hands of a few large companies in advanced stages of development.

The three largest financing rounds in the German biotech sector accounted for 71% of all venture capital. Klaus Ort, Senior Partner in Life Sciences & Health at EY-Parthenon, said: “While capital is available, it is increasingly concentrated in the hands of a few, more advanced companies. Many biotechs are stalling, especially during their growth phase. The sustainable development of the sector therefore depends significantly on closing funding gaps and accelerating the transition from research to industrial value creation.” Furthermore, he criticized at the Biotech Finance Summit organized by Bio Deutschland: “Here in Germany we invest in ideas, and abroad we invest in successes.”

Sales slightly down, employment grows in the German biotech sector

The German biotech industry’s total revenue in 2025 was €12 billion, 1% below the previous year’s figure. Research and development expenditures declined by 4% to €4.5 billion. At the same time, the number of employees rose by 3% to 59,607. The number of companies also increased by 3% to 1,052. Access to capital markets remains problematic. Once again, no German biotech company successfully went public on the domestic market.

While twelve biotech IPOs with a total issue volume of approximately €2.1 billion were carried out in the US despite a generally subdued market environment, the IPO window in Germany remains closed. Almost all of the recent IPOs of German biotech companies took place on the NASDAQ. The M&A market also lost momentum after a strong year in 2024. Although the number of mergers and acquisitions increased from ten to 13 transactions, the total value fell by 38 percent to 2.9 billion euros.

Early-stage financing collapses

The financing situation for young German biotech companies is developing particularly worryingly. After more than doubling the volume of early-stage financing from €207 million in 2023 to €419 million in 2024, it fell back to just €160 million in 2025. Series B financing, in particular, experienced a historic decline. The financing volume fell from €169 million to a mere €7 million – the lowest figure in the past eight years. Series A financing remained comparatively stable at €75 million.

Although seed financing declined to €78 million after the record year of 2024, it was still significantly above the long-term average. Dr. Viola Bronsema, Managing Director of BIO Deutschland e. V., explained: “This sharp decline in follow-on financing indicates that larger venture capital follow-on rounds were hardly realized between 2022 and 2025 due to increasing investor uncertainty.” At the same time, the industry representative sees a need for political action:

“Germany has a problem with the value creation of biotechnological inventions and developments: Scientific excellence is undisputed, but so far it has not translated into a corresponding level of economic strength. Limited access to growth capital and lengthy processes within fragmented structures are hindering development. It is now crucial to improve these framework conditions quickly and effectively. This makes an innovation-friendly collaboration between politics, the capital market, and industry all the more important, one that facilitates investment and enables scaling.”

Clinical pipeline inspires confidence

Despite the challenges, there are positive signs from the industry. German biotech continues to be characterized by applications in therapy and diagnostics. The number of clinical trials is developing particularly well: the number of Phase 2 projects rose from 100 to 118 in 2025. At the same time, the overall pipeline is showing signs of maturity, with an increasing focus on advanced stages of development.

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(Featured image by Marek Studzinski via Unsplash)

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First published in VentureCapital Magazin. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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